Dollar tumbles after weak consumer confidence & Chicago PMI
Dollar’s fall resumes in US session after disappointing consumer confidence and Chicago PMI.
Conference Board consumer confidence index dropped to 105.4 in
October from upward revised 105.9 in prior month, much below expectation of
108.0. This is in contrast to the strong U of Michigan confidence index that rose to 15 months high. The drop in confidence could be viewed as and indication that the impact of falling energy price is fully reflected already and may not be the factor to support confidence in consumers and thus their spending. Chicago PMI dropped sharply from 62.1 to o53.5 in October, much worse than expectation of 59.0. Even though a reading above 50 still indicate expansion, the pace is the slowest in more than a year.
Released earlier, US Q3 employment cost rose faster than expected by 1.0% versus expectation of 0.8% but impact was muted. From European session, Eurozone business climate and Economic confidence came it better than expectation, UK Gfk consumer confidence too.
GBP/USD
Daily Pivots: (S1) 1.8962; (P) 1.9001; (R1) 1.9050;
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Cable’s retreat from 1.9040 was supported by 1.8953 minor support and rally resumed in US session by breaking above 1.9040 high. Rise is expected to follow towards 1.9090 resistance. Break will bring further rally towards 1.9142 resistance (this year’s high). On the downside, below 1.8953 will indicate a short term top is formed and bring further consolidation.
In the bigger picture, correction from 1.9142, which has completed at 1.8517, could merely be a correction to the rise from 1.8090. Attention is turned to 1.9142 high. firm break above this level will indicate both rally from 1.8090 and medium term up trend from 1.7047 has resumed. Next upside target will be 2004 high at 1.9554, with 100% projection of 1.8090 to 1.9142 from 1.8517 at 1.9569. Meanwhile, it will take a break below 1.8672 support (to be adjusted later) to reconsider short term bearishness.
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Shing-Ip Tsui is the founder and CEO of
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